The rise of MyTax and the fall of tax agents
In 2013/14, 74.2% of all individual tax returns were prepared by tax agents. Fast forward six years to 2019/20 and that figure had fallen to 66%.
For the first five months of the 2020/21 financial year, tax agent prepared returns have fallen 13% (compared to last year). For tax agents, this is a loss of 460,000 individual clients and $50 million in annual fees which translates into a 2020/21 market share of 57% for tax agents, and 43% for MyTax.
If this trend continues in 2021/22 (and it most likely will), then tax agents and MyTax will both have a 50% market share each. The Federal Government and ATO’s research indicates that eventually, 75% of individuals will be preparing their tax returns for free through MyTax. The 25% market share serviced by tax agents will predominantly be for more complicated returns, investments, rental properties, etc.
What does this mean for public accounting practices?
- Accountants can still grow their individual client base, but it gets harder and harder every year. In a shrinking market, accountants need to be continually gaining clients from competitors by offering a better service.
- Accountants must focus on obtaining business clients which requires skill and time.
- Accountants need to increasingly offer existing business clients business advisory/value-adding services. This involves investment in training and resources, and requires selling skills.